Dec 8 (Reuters) – U.S. industrial firm Honeywell (HON.O) said on Friday it will buy the security unit of air conditioner maker Carrier (CARR.N) for $4.95 billion in cash to expand its building security business, where Recently growth has slowed down. Month.
The deal is Honeywell’s largest under new CEO Vimal Kapoor and will give the carrier access to brands such as electronic lock maker Onity, which is used by several major hotel chains, and cloud-based lock maker Supra.
Carrier Access Solutions security business provides residential, commercial and industrial security systems. Reuters reported earlier this year that the company was in talks with advisers to spin off its fire and security business.
“Strategically, this is a hands-on acquisition for Honeywell. It was the most logical buyer and so it is no surprise, although the multiple is certainly very high as already mentioned,” said Wolfe Research analyst Nigel Coe.
Shares of the Florida-based carrier rose 4.3% to $55.17 in early trading, while Honeywell fell about 1.4%.
The deal will help boost Honeywell’s building technology business, which has been struggling with low revenue growth this year due to weak demand. However, Honeywell’s overall performance was supported by strong results in its aviation business.
“Our concern with the deal is that it appears Honeywell is maxing out at peak non-residential construction activity,” said UBS analyst Chris Snyder.
The all-cash deal is expected to close before the end of the third quarter of 2024 and will deliver cash-earnings-per-share to Honeywell in its first full year of ownership.
The carrier said it plans to use the estimated net proceeds of about $4 billion from the deal to repay debt. Its fire and security unit accounted for about 17% of its total sales last year.
($1 = 0.9306 euros)
Reporting by Nathan Gomes and Pratyush Thakur in Bengaluru; Editing by Devika Shyamnath
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